Yankee Parking Garages to Make Debt Payment, Nuveen Says

March 23 (Bloomberg) -- The operator of parking garages at
the new Yankee Stadium, whose revenue is running 40 percent
below projections, will make its April 1 debt payment, according
to Nuveen Asset Management, which holds about half of the bonds.

Bronx Parking Development Co., a subsidiary of a non-profit
development agency, will make the payment through a combination
of operating revenue and a draw on its debt-service reserve
fund, John Miller, Nuveen’s chief investment officer, said in an
e-mail. According to Bronx Parking’s 2011 budget, it owes $6.9
million on April 1. The reserve fund will decline by a $5.5
million draw, according to the budget.

Bronx Parking issued $237.6 million of municipal bonds in
2007 through New York City’s Industrial Development Agency to
build three parking garages and renovate two others at the
50,287-seat stadium, home of the New York Yankees Major League
Baseball team. The stadium, which opened in 2009, was built
across the street from the original ballpark.

The garages and parking lots managed by the non-profit have
generated 39 percent less revenue in the first nine months of
2010 than projected, according to financial statements.

The public financing of the garages, which included $102
million from the city and state, was assailed by neighbors who
said the facilities would lead to more traffic congestion and
pollution in the South Bronx, while providing no benefit to the
community. Labor-backed groups said the city and state shouldn’t
subsidize low-wage jobs.

Subway Service

The parking garages face competition from public
transportation, as most city dwellers take the subway to games.
Fans who live in New York’s Westchester County or Connecticut
can take the Metro-North commuter rail.

For the nine months ending Sept. 30, Bronx Parking
collected $6.2 million less in revenue and sales taxes than
budgeted, according to a financial statement filed on Dec. 30.
Bronx Parking plans to charge $35 per car this year, compared
with $23 last year.

Nuveen, based in Chicago, owned $116.5 million of the bonds
as of the end of February. The debt traded March 17 at about 60
cents on the dollar, according to data compiled by Bloomberg.
Bonds maturing in 2037 yield about 10.2 percent.

Bonds Attractive

In a March 18 note, Morgan Stanley said the bonds look
attractive and are worth at least 80 cents on the dollar. The
start-up parking system hasn’t reached its full potential, wrote
Peter Block, a Morgan Stanley executive director, in fixed-income trading.

“Bonds are worth at least 80 to the extent the Yankees
continue to draw consistently strong attendance as they have
done historically, and Bronx Parking Development Co., the
project owner, continually monitors and adjusts parking rates as
needed over time,” Block wrote.

The Yankees led all Major League teams in attendance last
year at 3.77 million, according to ESPN. The garages and lots
have 8,428 spaces available to the public. The Yankee stadium
garages had an occupancy rate of 60 percent last year, which
will continue in 2011, according to Morgan Stanley.

Bronx Parking’s debt service reserve fund will shrink to
$11 million from $16.6 million, according to its 2011 operating
budget. The debt-service coverage ratio, or the amount of cash
available to meet annual interest and principal payments, is
0.56, according to the budget.

Pricing Power

Morgan Stanley’s Block wrote that he wasn’t concerned about
the draw on the debt-service reserve because 63 percent of trips
to games at the stadium during weekdays are made by car and
drivers have limited parking options, giving the garages
“adequate” pricing power to raise rates.

To avoid a default, Bronx Parking would have to raise
parking rates to $42 in 2013 and to $55 by 2016, Block wrote.
The garages will have enough revenue to fully pay debt service
by 2015, Block wrote.

William Loewenstein, president of the Community Initiatives
Development Corp., the non-profit parent of Bronx Parking
Development Co. based in Hudson, New York, about 100 miles (160
kilometers) north of the Bronx, didn’t return a call seeking
comment.